Each week, we review the week’s news, offering analysis about the most important developments in the tech industry.
Greetings from the alternate reality we call Silicon Valley. I’m Nicole Perlroth. Here’s a look at the week’s tech news:
Uber’s very bad, horrible, no good day
Arguably, the biggest news to come out of the Apple event on Tuesday was Uber’s layoffs. Usually anytime Apple unveils anything new, it dominates the entire week’s tech news cycle. But Uber stole Apple’s thunder, and not in a good way.
Soon after Apple executives unveiled their latest shiny objects — lower-priced iPhones, a new iPad and a $5-a-month streaming service — Uber announced that it had laid off nearly 8 percent of its global product and engineering group, its second round of layoffs in less than three months.
By late Tuesday, the day had gotten worse for the ride-hailing service after California legislators approved a landmark bill requiring companies like Uber and Lyft to treat their contract workers as employees.
The bill, which is expected to go into effect Jan. 1, would guarantee employment benefits, like a minimum wage, overtime and workers’ compensation to hundreds of thousands of independent contractors. It would also drive up costs for companies like Uber, which is already bleeding billions of dollars in losses.
California’s Assembly Bill 5 could reshape the gig economy and would apply to the entire constellation of on-demand, internet companies that popped up over the past decade: Instacart, Postmates, DoorDash and any company that counts on independent contractors for work that is part of their regular business.
Uber, Lyft and DoorDash previously pledged $90 million to try to block the law. On Wednesday, Uber’s chief legal officer, Tony West — surprising the many, many people who have hailed a ride with Uber’s service — said that the company did not expect to have to reclassify its drivers as full-time employees because they are not core to its business.
Uber’s business isn’t providing rides, Mr. West said, but simply “serving as a technology platform for several different types of digital marketplaces.”
He added that Uber was “no stranger to legal battles.”
Andreessen Horowitz, the venture capital firm, is backing Palmer Luckey’s virtual wall start-up at a $1 billion-plus, unicorn valuation. This is the same Palmer Luckey who left Facebook after it was revealed that he was backing right-wing internet trolls and anti-Hillary Clinton meme factories in 2016.
Mr. Luckey’s surveillance start-up, Anduril, has gone where many Silicon Valley tech workers have refused to go. The start-up, which is also backed by the Palantir co-founders Joe Lonsdale and Peter Thiel, is testing digital cameras and artificial intelligence technology that tracks people crossing the southern border.
Tech workers have made clear in recent months that they want no part of similar military and surveillance projects. In June, Google said it would not renew a Pentagon contract after thousands of its employees protested and some resigned. Employees at Microsoft and Salesforce have similarly protested the companies’ projects with Immigration and Customs Enforcement.
Andreessen Horowitz, which eagerly offers up investors for interviews timed to such funding announcements, has been unusually tight-lipped on its investment in Anduril.
For a deeper dive on “virtual” border wall technology, read my colleague Cade Metz’s excellent article last year.
About that sky-high Juul valuation
The Trump administration announced plans to ban the sale of non-tobacco-flavored e-cigarettes just one year after Juul Labs, the dominant e-cigarette company, raised money from the tobacco giant Altria at a $16 billion valuation.
Juul’s soaring valuation has been a windfall for hedge funds, including Tiger Global Management, Darsana Capital Partners, D1 Capital Partners, Marianas Fund Management and Coatue Management; the mutual fund Fidelity Investments; and venture capital investors like Tao Capital Partners.
The proposed ban could send Juul’s valuation into a free fall. But a Juul spokesman told The New York Times that it would comply. “We strongly agree with the need for aggressive category-wide action on flavored products,” said Ted Kwong, the spokesman.
The administration’s announcement followed news that a sixth person in the United States had died from a vaping-related lung illness. Officials are still investigating at least 450 illnesses across 33 states. It would follow similar bans by Michigan, which this month became the first state to prohibit the sales of most flavored e-cigarettes, and San Francisco, which in June became the first major American city to ban e-cigarettes. And Michael Bloomberg, the former mayor of New York City, weighed in on Tuesday, announcing a $160 million push to ban flavored e-cigarettes.